The newly proposed employment law, the Balanced employment market Act (Wet arbeidsmarkt in balans, “Wab”), aims to encourage employers to offer employees indefinite employment contracts instead of fixed term contracts. Although the Wab currently has the status of legislative proposal, we would like to inform you on the government’s plans for the employment market.
An overview of the most important plans:
1. Chain of employment contracts 3 years maximum
The government plans to extend the maximum period of time during which successive fixed term employment contracts can be entered into from 2 to 3 years. This is to relieve the pressure on employers and to provide employees with more security. Currently, the so-called ‘chain regulation’ allows maximum 3 successive fixed-term contracts in maximum 2 years. Most employers are uncomfortable with providing employees an indefinite term contract after 2 years, which often results in temporary contracts not being extended after this period of time.
2. Transition allowance due from day 1
Currently, employees are entitled to payment of a transition allowance after 2 years of employment. To reduce the appeal of fixed-term contracts to employers, the government proposes the transition allowance to be due from the first day of employment onwards. As a result, employers will also have to pay a transition allowance to employees who are dismissed during the probationary period. As a compensation, the transition allowance accrual will decrease for employees with many years of service (10 years and up). This will result in a relatively cheaper dismissal of long-term employees.
3. Lenient dismissal law
The decision to dismiss an employee is often a result of several circumstances, each of which individually are insufficient to terminate the employment contract. Current dismissal law does not allow stacking of statutory dismissal grounds: it requires at least one dismissal ground of which all statutory requirements must be met. Practice shows this is hardly ever the case. As a result, employers and employees remain stuck with one another. As a solution, government proposes a a so-called cumulative dismissal ground on the basis of which an employee can be dismissed. To compensate for the absence of a statutory dismissal ground, a judge can attribute an extra compensation to the employee of maximum 50% of the statutory transition allowance.
4. Expanded probationary period
In order to encourage employers to offer their employees indefinite term contracts, the maximum probationary period for such contracts will be expanded from 2 months to 5 months maximum. For a long-term contract for a definite period of time (2 years and up), the maximum probationary period will be 3 months.
5. Better rights for on-call employees
To protect on-call employees from permanently being on-call, employers will be compelled to call the employee for duty ultimately 4 days ahead. If the employee is called upon less than 4 days ahead, he is not compelled to respond. If the employer cancels the on-call employee less than 4 days ahead, the on-call employee is entitled to payment of the hours for which he was initially called upon. The on-call employee must be offered a fixed number of hours of work after 1 year of employment, equal to the average number of hours which he has worked during the last year.
6. Lower unemployment social security premiums for indefinite contracts
Another measure to make indefinite contracts more appealing to employers: unemployment social security (WW) premiums to be paid by employers will be lower for indefinite term contracts than for temporary contracts. Currently, WW premiums depend on the sector in which the employer operates. The Wab is intended to enter into force per 1 January 2020. Ovidius will keep you informed on the current status of the legislative proposal.